IV.10. SCIENCE AND INNOVATION: ESTONIA ESTONIA Hot STI issues Improving Estonia’s long-term growth through: ● Increasing the quality and efficiency of public research and reforming the public R&D funding system. ● Strengthening the private sector’s R&D investment and innovation capability and the business environment for innovation. ● Strengthening the future supply of PhDs in S&E. General features of the STI system: Estonia is a small OECD economy and its government’s priorities include R&D and innovation. Over the past decade, Estonia has strengthened its R&D and innovation system through market-oriented reform of the former Soviet system. Estonia has one of the highest GERD growth rates in the OECD area, at 11.8% a year during 2005-10. BERD increased significantly from 0.42% to 0.82% of GDP over the same period. In 2010, the business sector performed 50% of GERD, up from 45% in 2005. Nonetheless, business innovation remains below the OECD median in terms of R&D expenditure (Panel 1 (d) ), top firms (1 (e) ), patents (1 (f) ) and trademarks (1(g)), and it is concentrated in a limited number of high-technology sectors, such as ICT, biotechnology, and financial and telecom services. Estonia has a relatively strong public and university research system (1(a)(c)), a solid human capital base (1(s)(t)(u)(v)), good connections to global knowledge networks (1(q)(r)) and Internet infrastructure and use is at the OECD median (1(k)(l)(m)(n)). Recent changes in STI expenditures: In spite of the economic crisis, GERD rose from 1.28% of GDP in 2008 to 1.63% of GDP in 2010. The government funds 44% of GERD, the business sector 44%, and foreign sources 11%. For 2007-10, government-financed GERD and industry-financed GERD increased from 0.45% to 0.71% and from 0.49% to 0.72% of GDP, respectively. Forecasts suggest public R&D budgets are likely to increase in the coming years. Overall STI strategy: The Knowledge-Based Estonia II Research and Development and Innovation Strategy 2007-13 sets the key objectives and technolog ical priorities for R&D. The main objectives are to increase the quality of both public research and private-sector innovation and the potential for long-term growth. These objectives are to be achieved by developing human capital (e.g. increasing the attractiveness of researcher careers); increasing enterprises’ innovation capacity; developing policies for long-term growth; and reorganising public-sector R&D and innovation to increase efficiency (e.g. modernising R&D infrastructures). The key technologies identified in the strategy are ICTs, biotechnology and material technologies. The strategy for 2014-20 will be formulated during 2012. STI policy governance: The Estonian Research Council was created by the 2011 amendment of the Organisation of Research and Development Act to serve as a funding agency; it has absorbed the previous Estonian Science Foundation and Archimedes Foundation. Its missions are to: foster basic and applied R&D, support researchers, encourage international co-operation and co-ordinate and implement national and international training and educational and research programmes. Key figures Labour productivity, GDP per hour worked in USD, 2010 (annual growth rate, 2005-10 ) Environmental productivity, GDP per unit of CO2 emitted in USD, 2009 (annual growth rate, 2005-09) 284 26.4 (+3.2) 1.77 (+2.5) GERD, as % of GDP, 2010 (annual growth rate, 2005-10) GERD publicly financed, as % of GDP, 2010 (annual growth rate, 2005-10) 1.63 (+11.8) 0.73 (+12.1) OECD SCIENCE, TECHNOLOGY AND INDUSTRY OUTLOOK 2012 © OECD 2012 OECD SCIENCE, TECHNOLOGY AND INDUSTRY OUTLOOK 2012 © OECD 2012 or al ad at te ns in to le n pl m en t( ) at io Pa te in in g p er in x( j) (i) h) ) (f ) (g P) de GD ) ) e) (d (c )( P) ) b) )( P) DP GD GD rG hi (p rs ld er er pe (p (p l( eu so en ar ks ita ar P) P) DP GD GD rG er er (a )( P) DP GD rG pe (p (p s( es or ap pr ye tr e 5 m ec de ls re ili st i tu na am ve tf ur en n nt ha of en Tr a at in ur nd jo er pe (p s( re tie i tu si nd er pe le ex r ti iv pe un ex &D Ve st se es Ea sl cp eR di at Tr ia or ua &D -q 0 D 50 R& sR op es rp m co ic To p et sin th f ir 0 Bu 50 ns nt To p ic bl OECD median v) (u % )( g t) s) % )( in e( er nc % )( q) (% )( r) l( g ve in ne ie gi oy en sc le nt ) o) bl Pu Business R&D and innovation m nd si ea er n te ) n) (p )( x( (m P) ) (l) (k (% )( GD ip er de n) n) DP in t io rG sh (p or tio pa ca o- th bs au la pe ss la io n) Knowledge flows and commercialisation ta nc rm ie r fo sc pe lc o- ic du na lc bl ne pu s( di po io at at ul ul op op rp re ea er i tu tr (p nd ye io na ar at io r ti in p t io ra to rn te te at pe pu ex en s) m m rn nd D ve sa rn at In te tie R& go te pe rp Pu Middle range of OECD values pa n cu n ld io t io oc ua si ic E- ys pe s( s( er er r ib r ib sc sc su su ss d ou In er bl ar -o ul ye S& T gr 15 - op iv pu un ed by nc tp d ul il e na om an d Internet for innovation Ad sf -f i on db an Science base ct nt ut oa db Top/bottom 5 OECD values Do te (a br oa Bottom half OECD ry ks ss br Top half OECD st or le d Bottom half OECD du tw ir e xe Top half OECD Pa In Ne W Fi IV.10. SCIENCE AND INNOVATION: ESTONIA Figure 10.13. Science and innovation in Estonia Panel 1. Comparative performance of national science and innovation systems, 2011 Estonia a. Competences and capacity to innovate Entrepreneurship 200 100 150 50 0 b. Interactions and human resources for innovation Human resources 200 100 150 50 0 Note: Normalised index of performance relative to the median values in the OECD area (Index median = 100). 285 IV.10. SCIENCE AND INNOVATION: ESTONIA Science base: Over the last decade, Estonian public research has improved significantly. The four public universities play an important role in R&D and stand slightly above the OECD median in terms of international scientific publications (1(c)). However, Roadmap outlining the need to upgrade existing research infrastructures and create new research facilities. It lists 20 research infrastructures of national importance and serves to guide public investments in R&D infrastructures over the next university-performed GERD fell from 52% in 2000 to 38% in 2010. The Estonian government has adopted several prog ramm es to support knowledg e production and to increase universities’ excellence, competitiveness and internationalisation. The amendment of the Organisation of Research and Development Act introduced two new types of R&D evaluation: regular evaluations to assess R&D quality against internationally recognised criteria and targeted evaluations designed to improve research in specific fields. 10-20 years. Business R&D and innovation: During 2001-10 BERD grew faster than in other OECD countries. Yet, as a share of GDP and of patenting by firms, BERD remains well below the OECD median. Moreover, just 58 firms account for 75% of BERD. The Estonian government intends to stimulate business R&D and innovation with direct funding (e.g. innovation vouchers) and non-financial measures (e.g. the Innovation and Entrepreneurship Awareness and Competence Raising Programme 2009-13). Entrepreneurship: The conditions for entrepreneurship and innovation are below the OECD median (1(h)(j)). Efforts are under way to promote entrepreneurship (e.g. Innovation and Entrepreneurship Awareness and Competence Raising Programme 2009-13; S t a r t - u p E s t o n i a) . In a d d i t i on , f os t e r i ng entrepreneurship in HEIs is part of the Government Action Plan 2011-15. ICT and scientific infrastructures: Investments in R&D infrastructures are largely funded by EU structural funds. The total budget for 2007-13 is USD 320 million, split between investment in buildings (USD 165 million) and in research equipment (USD 157 million). In 2010, the government adopted a Research Infrastructures 286 Knowledge flows and commercialisation: Efforts are being made to strengthen interactions between the scientific and business communities (e.g. the University of Tartu has adopted a new governance structure which involves external partners in the university’s work and the government has a programme for training doctoral students in cooperation with business). Human resources: The Estonian population’s tertiary education level is above the OECD median (1 (s) ). In view of the low rate of S&T doctoral graduates, the Archimedes Foundation created in 2010 a Unit for Science Communication to coordinate several publicly funded initiatives and to manage a programme to raise young people’s interest in S&T careers (budget of USD 6.5 million for 2009-13). Also, the Higher Education Strategy and the R&D and Innovation Strategy have as an objective 300 PhD graduates a year by 2015. Emerging technologies: The Estonian government has launched six national R&D programmes in suppo r t of R &D in energy technology, I CT, biotechnology, health, environment technology and material technology. The Centres of Excellence and Competence Centres programmes also clearly target ICTs, environment and new materials, health care and medicine. Green innovation: Energy, sustainable development and environm ental iss ues are increas ingly important government priorities. This is reflected, for example, in the Estonian Energy Technology Programme, a co-operation programme involving research, business and the state, to develop oil shale technologies and new, mainly renewable, energies. OECD SCIENCE, TECHNOLOGY AND INDUSTRY OUTLOOK 2012 © OECD 2012 IV.10. SCIENCE AND INNOVATION: ESTONIA Figure 10.13: Science and innovation in Estonia Panel 2. Structural composition of BERD, 2009 As a % of total BERD OECD median OECD median (2005) Estonia Estonia (2005) Industry 100 High-tech manufacturing 80 SMEs 60 40 20 Low-knowledge services High-knowledge market services 0 Medium- to low-tech manufacturing Large firms Services Panel 3. Overview of national innovation policy mix, 2010 Estonia OECD sample median Estonia (2005) Public research University-centred (1) Public lab-centred (1) Basic research oriented (1) Applied/experimental research oriented (1) Civil oriented (2) Defence oriented (2) Generic (2) Thematic (2) Institutional block funding (3) Project-based funding (3) Public support to business R&D and innovation Support to business R&D and innovation (4) Support to public research (4) Direct funding of business R&D (5) 100/ 0 1. 2. 3. 4. 5. Indirect funding of business R&D (5) 75/25 50/50 25/75 0/100 Balance as a percentage of the sum of HERD and GOVERD. Balance as a percentage of total GBAORD. Balance as a percentage of total funding to national performers. Balance as a percentage of the sum of HERD and GOVERD funded by government and higher education and components of (5). Balance as a percentage of the sum of indirect funding of business R&D and innovation through R&D tax incentives and direct funding of BERD through grants, contracts and loans. Source: See reader’s guide and methodological annex. 1 2 http://dx.doi.org/10.1787/888932690377 OECD SCIENCE, TECHNOLOGY AND INDUSTRY OUTLOOK 2012 © OECD 2012 287